Linea Mercati Interview 8/1/24
August 2, 2024
On Friday, after the publication of worse-than-expected employment figures
August 5, 2024The New York Stock Exchange, which had started the first session of the month in the green, fell on Thursday following American indicators that raised concerns about the outlook for the world’s largest economy.
The Dow Jones index fell 1.21% to 40,347.97 points, its worst session since May, the Nasdaq, dominated by technology, fell 2.30% to 17,194.14 points and the S&P 500 fell 1.37% to 5,446.68 points.
Manufacturing activity in the United States recorded a fourth consecutive month of decline in July, and deteriorated further, still penalized by high interest rates which weigh on consumption and investment, according to data from the professional federation ISM.
The index measuring that activity fell to 46.8%, down 1.7 percentage points from June, back below the 50% mark that signals a contraction in activity.
That’s worse than analysts had expected, with analysts expecting a less severe contraction than in June and expecting the index to rise to 48.9%, according to the MarketWatch consensus.
As for weekly jobless claims, also released Thursday, they rose to a nearly one-year high of 249,000 last week, more than expected.
“The macroeconomic news has spooked the market, particularly the ISM which has contracted,” noted Peter Cardillo of Spartan Capital.
“The market is starting to worry that the economy is slowing to the point of causing a recession in the next eight to 12 months,” the analyst added.
Bond yields fell below 4% for the 10-year bond for the first time since February, to 3.96%.
“Usually, falling bond yields are positive for the stock market, but this time the market is looking at it differently,” Cardillo said.
“Investors are wondering if the economy is slowing too much,” he added.
The day before, the American markets had experienced a day of rebound in the wake of a meeting of the Fed which did not rule out Wednesday to lower its rates in September.
Friday, just before the opening of the Stock Exchange, the Labor Department will publish the American employment figures for July. Hiring should decrease to 185,000, after 206,000 in June, according to forecasts by MarketWatch.
On the stock market, Meta which temporarily soared by more than 9% during the session following brilliant results, closed up 4.82% at 487.74 dollars.
The profit of the group which oversees Facebook, Instagram and Whatsapp climbed by 73% over one year, to 13.5 billion dollars, in the second quarter for a turnover of 39 billion (+22%), higher than its own expectations and those of the market.
Amazon ended down 1.56% just before announcing, admittedly, a doubling of its profit but on a turnover that was disappointing in the eyes of analysts.
The share price of the online sales and cloud (remote computing) giant fell 4% in electronic trading after the close.
Apple ended down 1.68% as it also awaited its results. Tesla plunged 6.55% to $216.86.
The red lantern was carried by vaccine maker Moderna, which fell 21.01%. The company sharply reduced its sales outlook for 2024 due to lower demand for Covid vaccines in Europe.
Intel, which ended down 5.50%, was still down 14% in after-hours trading. The group announced a suspension of its dividend distribution as it expects lower-than-expected third-quarter sales.
The microprocessor maker also plans to cut its workforce by 15%.
Boeing, for its part, fell 6.45% to $178.31.
Core stocks such as soda giant Coca-Cola (+1.83%) and household and hygiene products group Procter and Gamble (+3.07%) fared well.
On the other hand, within the discretionary spending sector, home furnishing site Wayfair declined 8.12% as the company reported a second-quarter loss of $42 million and also warned of consumer “caution.”
